Difference Between Forecasting and Planning

Main difference

The main difference between Forecasting and Planning is that Forecasting is a prediction or projection about a future event, based on past and present performance and trend and planning is the process of writing plans for what should be done in the future, and that too is based on current performance plus expectations.

Forecast vs. planning

Forecasting is predicting the future performance of the organization based on past and present performance and data, while planning is the process of thinking about the future course of action in advance. Forecasting provides a basis for planning and plays a vital role in the planning process. Forecast based on a certain degree of conjecture and assumption of a particular event, on the contrary, planning is based on the objective, performance and relevant information that requires the elaboration of a plan. Forecast based on facts and some assumptions based on past and current performance. Planning, on the other hand, emphasizes facts and expectations. Forecasts are made by managers, analysts, and experts at different levels employed by the organization,

Comparison chart

Forecast Planning
The forecast indicates the estimation of the future performance of an entity, considering past and present performance and events. Planning is a method of looking into the future and projecting the future course of action of the company and also of various other units within it.
Estimation of future events or trends. Evaluate the future and foresee it.
based on
Applications and assumptions Relevant information, forecasts and objectives.
stand out in
Facts facts and expectations
Sometimes the management hires experts. High level managers

What is the forecast?

Forecasting is a procedure that uses historical data as inputs to make informed estimates that are predictive in determining the direction of future trends. Businesses use forecasting to determine how to allocate their budgets or plan expenses in advance for an upcoming period. Forecast generally based on projected demand for the products and services offered. Investors use forecasting to establish whether events that affect a company, such as sales expectations, will increase or decrease that company’s stock price. Forecasting also provides an important benchmark for companies, which need a long-term view of operations. The further away from the forecast, the greater the probability that the assessment will be inaccurate.


  • Qualitative and quantitative forecasting method: the forecast based on personal opinion is a qualitative method while; the forecast based on past numerical data is a quantitative forecast.
  • Naive forecasting method: In this method, the past year is used as the forecast for the current period, without attempting to adjust them.
  • Judgment Forecasting Method: This forecasting method based on subjective estimates and intuition. The statistical survey, the Delphi method, the composite forecast, they are all judgmental forecasts.
  • Time series forecasting method: In this method, a group of data recorded during a specific period. Most of the time, past patterns repeat themselves in the future.

What is planning?

Planning is the basic function of management, which includes deciding in advance what is going to be done, when it is going to be done, how it is going to be done and who is going to do it. It is a mental process that establishes the goals of an organization and develops various courses of action, by which the organization can achieve those goals. It pinpoints how to achieve a definite goal. Planning is nothing more than thinking in advance that the action is carried out. It helps us look to the future and decide in advance how to deal with the circumstances that we are going to encounter in the future. It consists of logical thinking and rational decision making.

Planning Features

  • First and foremost management function: Planning lays the foundation for other management functions.
  • Goal oriented: focuses on defining the objectives of the
  • Pervasive: Pervasive in the perception that it is present everywhere and is needed at all levels of the organization.
  • Continuous process: plans are made or made for a specific period, say for a month, quarter, year, etc. Therefore, it is a constant process, since the plans framed, executed and followed by another plan.
  • Intellectual process: It is sarcasm or mental exercise that implies the application of the mind, thinking, forecasting, etc.
  • Decision making: decisions made regarding the choice of alternative courses of action that can be undertaken to achieve the goal.

Key differences

  1. Forecasting involves predicting the future performance of the company, taking into account past and current performance and events. In contrast, a mental process anticipates the future course of action for the company and also for various other units, within it, it is called planning.
  2. Forecast connected with the prediction of the future course of an event or trend. Against this, planning was associated with the evaluation of future action and the taking of measures to reach it.
  3. Forecasting activity done by different levels of managers, or sometimes experts, such as statisticians, analysts, and management employs the economist. On the contrary, it is the duty or responsibility of the top level managers to formulate plans for the business.
  4. Forecasting relies on postulates and assumptions, which involves some degree of guesswork, and therefore the possibility of error cannot be completely eliminated. On the other hand, planning based on relevant information, forecasts and objectives.
  5. The forecast takes into account facts related to the entity’s past and present performance. In contrast, planning considers past and present data and facts, as well as aspirations, to decide in advance of the future course of action.

Final Thought

Forecasting and planning both require skills like reflective thinking, farsightedness, decision making, experience and imagination, on the part of managers, to accomplish the difficult task effectively and efficiently. Forecasting has an important role to play in the operation or planning process, since planning premises are based on forecasts.

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